THE FASCINATING HISTORY OF WORLD CURRENCY, FROM ANTIQUITY TO THE PRESENT DAY

From national currencies to the universal currency

Money is the only human invention capable of embodying both dreams and reality in an indissoluble bond; it is the abstract distributor of hope and a concrete means of controlling the lives of human beings and nations. From its first appearance in the Near East in the form of shiny little metal spheres, money has long been entrusted with the fates and fame of great kings, such as King Croesus (hence the saying, “as rich as Croesus”). The same is true of cities famous beyond the borders of the known world at that time: Athens, Corinth, and Aegina. In a world that measured time against the ancient Olympic games, the Croesus coins, Athenian Owls, Pegasus coins, and Aegean Turtles united different peoples in bonds made permanent by economic interests, often backed up by military force.

This period was doomed to be short, flames that soon died out under the ashes of time. With his seemingly unstoppable army, Alexander the Great, had managed to create and implement a single monetary system in Greece, Asia Minor, Syria, Egypt, Babylonia and beyond, which was well organised into three metals (gold, silver and bronze) with coins of identical weight and type for people who were very different from one another. Yet even this dream of his floundered on the banks of the Euphrates river at the end of spring 323 BC. After Alexander’s death, the political break-up of the territories he had conquered led to the unravelling of a monetary system that had not had enough time to grow deep roots in Asia.

Events took a different turn with Rome. The unification of Roman territories, with political and administrative control of provinces in Europe, Asia and Africa, ensured that conditions were in place for Roman currency to become implemented in systematic, profound manner in every corner of the vast Empire. First there were denarii, aurei and later sestertia; these became the tangible sign of a strong, well-organised central power able to control and unify highly diverse territories, cultures, economies and social fabrics. The Legions of the Roman Republic brought the silver denarius bearing the head of the Goddess Roma to newly conquered lands. Subsequently, Roman magistrates were sent by the Roman people and Senate or Emperor (as was the case) to ensure that a well-organised society (where even old, local coins could still be used for minor daily errands) would be centered on Roman currency. This situation held strong for over seven centuries, thanks to a dynamic power that survived pressure from the Barbarians and the transfer of Imperial insignia to Constantinople in 476 AD. Indeed, the gold solidus (or Byzantine coin) – a pure metal coin created by Constantine in the early 4th century AD in order to reverse the free fall of the old, glorious yet unsalvageable denarius, continued to function as an international currency. However, the times had changed for good. It was no longer the unifying authority of a strong State that guaranteed the currency’s success; it was the “faith” of different peoples and market mechanisms, rather than political rule, that did so. Thus the Byzantine coin continued to perform its role along ancient Mediterranean routes, making its way through the dark Middle Ages and imitated by Goths, Lombards, Arabs and Normans alike. Meanwhile, Europe began breaking up into thousands of small territories controlled locally by castles and monasteries, until the time of Charlemagne.

Under the Carolingian Empire, the European continent returned to conditions which enabled the relaunch of a high Medieval European “single currency”, as we would label it today: the silver denier. Although different in weight and alloy, and tied to a pound of around 400 grams (of which it was worth 240 parts), this new currency remained based on the old Roman system of the silver denarius. However, as with the Roman denarius, the Carolingian denier was also destined to lose weight and intrinsic quality - to devalue - over time. By the era of the Italy of Communes and great maritime republics, the gold ducats of Genoa, Florence and Venice were reigning in the market places of Europe and the entire Mediterranean basin (conquering the markets of Levant). The old silver Carolingian denier had already gone down other roads, in the various districts in which it had taken root. All later attempts to revive the denier were in vain.

History seemed to repeat itself. Like the ancient Greek Polis, so the Italian Communes, which were only formally tied to the Empire, in the absence of a strong centralised power, attempted to organise themselves territorially by forming monetary ties: between 1230 and 1250, Pisa, Siena, Lucca, Florence and Arezzo; and in 1254, it was the turn of Cremona, Bergamo, Brescia, Piacenza, Tortona, and Pavia. In short, the Communes sought local agreements to solve the historical problem of numerous different currencies.

However, the geographical discoveries of the 15th century, influx of a large amount of precious metals to Europe, the opening of new mines, and more rational, modern exploitation of ancient metal veins, would soon lead to the radical transformation of the social and political fabric of Europe, whose financial and market centers attempted by all means possible to withstand the weight of competition that was increasingly tougher to face. To counter the lack of coins, existing credit systems were refined. Soon, bills of exchange became a safer instrument for bankers and merchants of the time.

The world had changed dramatically since the time of the ducats issued by Italian cities (Florins, Genoese and gold zecchino coins, the undisputed lords of international trade). Now, under the powerful shadow of Charles V, a new French gold currency, the écu au soleil or “Sun above the crown” enjoyed conditions in which to reign. Specifically, seven nations united in an agreement of sorts which led them to issue “scudo” coins whose weight and alloy were very similar: France, Spain, Genoa, Venice, Florence, Rome and Naples. In essence, this heralded the first single international currency of the modern age.

More than two centuries later, France again gave birth to a new currency that would radically alter the monetary systems of the countries across Europe, particularly Italy, that adopted it. Named the Franco-Lira, with a centesimal subdivision, it originated during the French Revolution and was exported under Napoleon’s conquest of new lands. From 1861 on, the Lira (divided into 100 cents) became the single currency of a unified Italy. Just a few years later, at a memorable session held on 23rd December 1865 in Paris, Italy, France, Switzerland and Belgium (later joined by Greece) signed an agreement which foresaw the adoption of a single currency, based on gold and silver divisions, which could circulate freely in the signatory countries, known as the Latin Monetary Union.

This was the first step towards simplifying means of payment, something which could be delayed no longer in a world that was bound increasingly by common economic and trade interests. In 1871, the Confederation of Germanic States adopted the gold standard for its own monetary system. In 1873, Denmark signed a monetary agreement with Sweden which would later include Norway (in 1875). In 1892, Austria and Hungary also adopted a gold-standard monetary system.

Nonetheless, this too was abandoned in the 1930’s and 1940’s by all signatory countries: France, Belgium, the Netherlands, Switzerland, Poland and Italy, known as the “gold bar” countries. What modern nation states required was a new platform for exchange that respected national sovereignty. For today’s Europe, this platform is the Euro.

Yet global market mechanisms are knocking at the door: the boundaries that divide us today will seem too narrow for tomorrow’s generation. Old national currencies will seem a relic from the past. And the utopia of a universal currency will become reality.